HOUSE FINANCE COMMITTEE April 7, 1993 2:38 p.m. TAPE HFC 93-97, Side 1, #000 - end. TAPE HFC 93-97, Side 2, #000 - 258. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 2:38 p.m. PRESENT Co-Chair Larson Representative Hoffman Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf Co-Chair MacLean was absent from the meeting. ALSO PRESENT Representative Bunde; Dave Kellyhouse, Director, Division of Wildlife Conservation, Department of Fish and Game; Ceilia Kunz, Juneau, Rupe Andrews, American Association of Retired Persons; Nancy Bear-Usera, Commissioner, Department of Administration. SUMMARY INFORMATION HCR 9 Relating to management of the community development fisheries quota program and fisheries development by the state. CSHCR 9 (FSH) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Fish and Game, dated 3/17/93. HB 81 "An Act relating to the longevity bonus program." HB 81 was HELD in Committee. HB 232 "An Act relating to a bow hunting tag and bow hunting safety; and providing for an effective date." HB 232 was reported out of Committee with a "do pass" recommendation and with a fiscal impact note 1 by the Department of Fish and Game, dated 3/26/93. HB 253 "An Act amending the basis for determining refunds to local governments under the program of shared fisheries taxes; and providing for an effective date." HB 253 was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Revenue. HOUSE CONCURRENT RESOLUTION NO. 9 Relating to management of the community development fisheries quota program and fisheries development by the state. Representative Hoffman noted that HCR 9 was introduced to insure the State's role in the Western Alaska Community Development Quota Program (CDQ). The North Pacific Fishery Management Council established the CDQ Program as a component of the Inshore/Offshore allocation. He asserted that the progam is the most extensive economic development effort ever to occur in the poorest regions of Alaska. Representative Hoffman maintained that the CDQ program provides an opportunity for long-term, stable economic development for the communities of the Bering Sea coast, Aleutian and Pribilof Islands. He noted that the Governor is responsible for requesting, accepting, and reviewing proposals for quota allocation. He asserted that the CDQ program needs strong leadership and coordinated support to be successful. Representative Hoffman spoke in support of a review of past fisheries development policy proposals. He maintained that a comprehensive fisheries development policy that includes the CDQ program is necessary for the protection of the State's renewable multi-billion dollar fishing industry. Representative Hoffman observed that the resolution recognizes the CDQ program. He requested that the Governor fully commit the resources of his administration to the program's extension and expansion in the interest of benefiting the economies of both western Alaska and the entire State of Alaska. Representative Hoffman MOVED to report CSHCR 9 (FSH) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. 2 CSHCR 9 (FSH) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Fish and Game, dated 3/17/93. HOUSE BILL NO. 232 "An Act relating to a bow hunting tag and bow hunting safety; and providing for an effective date." REPRESENTATIVE CON BUNDE stressed that HB 232 is revenue generating. He stated that a bow hunting tag will be issued to develop a hunting safety program. DAVE KELLYHOUSE, DIRECTOR, DIVISION OF WILDLIFE CONSERVATION, DEPARTMENT OF FISH AND GAME stated that the Department's bow hunting safety program may be in jeopardy due to cuts in the Department. He noted that the bow hunting community has suggested the program as a voluntary effort to support wildlife conservation. Representative Martin asked how much revenue the program will generate. Mr. Kellyhouse stated that they anticipate that $35.0 thousand dollars will be generated. Mr. Kellyhouse clarified, in response to a question from Representative Therriault, that the tag will be in addition to the hunting license. Representative Martin MOVED to report HB 232 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 232 was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Fish and Game, dated 3/26/93. HOUSE BILL NO. 253 "An Act amending the basis for determining refunds to local governments under the program of shared fisheries taxes; and providing for an effective date." Co-Chair Larson explained that HB 253 requires that 95 percent of the shared fisheries taxes be shared with local governments. Currently, 100 percent of the funds collected are shared. Municipalities would receive 47.5 percent of the fisheries tax. Representative Grussendorf spoke in opposition of HB 253. Representative Martin asserted that the state's portion is only 40 percent. Representative Grussendorf pointed out 3 that the state support for municipalities has been reduced. Representative Navarre felt that administrative costs be taken of the top before revenues are divided. Co-Chair Larson asked if 5 percent represents actual administrative costs. PAUL DICK, DEPARTMENT OF REVENUE noted that the state would receive approximately $1 million dollars for administrative costs. He estimated that this would be a reasonable reimbursement for the state's administrative costs. The state collects the tax from the fish processors. Representative Navarre observed that 50 percent of the net proceeds will still be shared. He stressed that municipalities will only pay 2.5 percent. Representative Navarre MOVED to report HB 253 out of Committee with individual recommendations and with the accompanying fiscal note. Representative Grussendorf OBJECTED. Representative Hoffman MOVED to delete "5" percent and insert "2.5" percent. Representative Navarre OBJECTED. He stressed that the cost of state programs must be supported. A roll call vote was taken on the motion. IN FAVOR: Hoffman, Grussendorf OPPOSED: Hanley, Martin, Parnell, Therriault, Larson, Brown, Navarre Representative Foster and Co-Chair MacLean were absent from the vote. The MOTION FAILED (2-7). Representative Navarre MOVED to report HB 253 out of Committee with individual recommendations and with the accompanying fiscal note. Representative Grussendorf OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Hanley, Martin, Parnell, Therriault, Larson, Brown, Navarre OPPOSED: Hoffman, Grussendorf The MOTION PASSED (7-2). Representative Foster and Co-Chair MacLean were absent from the vote. HB 253 was reported out of Committee with a "do pass" 4 recommendation and with a fiscal impact note by the Department of Revenue. HOUSE BILL NO. 81 "An Act relating to the longevity bonus program." CEICLIA KUNZ, JUNEAU spoke in support of continued funding of the longevity bonus program. She asked "what will those old people do" without continuation of the program. RUPE ANDREWS, AMERICAN ASSOCIATION OF RETIRED PERSONS spoke in opposition of CSHB 81 (STA). He supported the Governor's legislation, SB 58. He preferred a phase-out period. NANCY BEAR-USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION noted that the state has attempted to address the fiscal liability of the longevity bonus program. She stressed that Governor's proposal is fair and reasonable. The Administration is not in support of CSHB 81 (STA). Representative Martin felt that the phase-out period proposed in SB 58 is too protracted. He asked if a straight step down program was considered. Commissioner Usera stated that a straight step down approach was considered. She stressed that the intent is to protect current participants. She noted that those on the program are generally on a fixed income. Commissioner Usera clarified that under SB 58 the cost of the program would rise for four years. CSHB 81 (STA) would result in an immediate savings of approximately $1,200 thousand dollars in FY 94. She stressed that the Governor's approach considers the social need along with the financial concerns of the state. Representative Therriault expressed the desire to see an immediate savings. Commissioner Usera asserted that the state can afford to continue the program in order to allow a phase out of the program. Representative Martin expressed concern with hold harmless costs. (Tape Change, HFC 93-97, Side 2) Representative Martin favored an immediate savings. Commissioner Usera strongly supported a phase-out approach. She noted that the Department of Administration's budget fully funds the FY 94 longevity bonus. She reiterated that the Governor's plan is reasonable. 5 Co-Chair Larson emphasized the state's need to reduce spending. He noted that state expenditures are approximately $250 million dollars over state revenues. He asked, how long can the State of Alaska spend more than it makes. Representative Brown asked if the Administration has considered reducing payments to $225 hundred dollars per month and retaining the phase-out approach. Commissioner Usera replied that she has been convinced that $25 dollars less a month would represent a large reductions to participants of the program. Representative Therriault asked if the decision was made to hold harmless those that are currently on the program. Commissioner Usera replied that the intent is to hold harmless current participants as long as possible. HB 81 was HELD in Committee. ADJOURNMENT The meeting adjourned at 3:31 p.m. 6